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December 21, 2011

Top 5 Aggressive Growth Mutual Funds

With risk at a premium of all premiums, these funds are getting it done

Like food and oxygen, aggressive growth is something to which few investors would say no, especially in the current volatile market. If only it wasn’t accompanied by that nasty downside risk.

Zacks Investment Research compiled a list of solid aggressive growth funds that still have their fair share of risk, but are getting promised returns nonetheless.

“Investors aiming to harness maximum gains from a surging market often select aggressive growth funds,” Zacks writes. “This category of funds invests heavily in undervalued stocks, IPOs and relatively volatile securities in order to profit from them in a congenial economic climate. Securities are selected on the basis of their issuing company’s potential for growth and profitability. By holding a larger number of securities and adjusting portfolios keeping in mind market conditions, aggressive growth funds offer a less risky route to investing in these instruments.”

Here are the top five aggressive growth mutual funds according to the research firm, which “earned a Zacks’ No 1. Rank (strong buy) as [it] expects these mutual funds to outperform their peers in the future.”

Legg Mason ClearBridge Aggressive Growth A (NASDAQ:SHRAX) OK, so Bill Miller’s value plays haven’t exactly worked out, but luckily Legg Mason has a few other arrows in its quiver.

According to Zacks, “the fund focuses on acquiring equity securities of companies whose earnings growth is higher than the average returned by firms which make up the S&P 500. The aggressive growth mutual fund has a three year annualized return of 20.39%.”

“Equity securities of domestic companies constitute at least 65% of the fund’s investments,” the research firm writes. “The fund invests in companies of all sizes but concentrates on smaller firms. The aggressive growth mutual fund has a five year annualized return of 5.26%.”

John Barr is the manager of the Needham Aggressive Growth Fund since January 2010.

Sentinel Sustainable Growth Opportunities A (NASDAQ:WAEGX) The Montpelier, Vt.-based funds invests “a minimum of 65% of its assets in domestic mid-cap stocks. Not more than 25% of its assets may be utilized to purchase stocks from a single industrial sector. The aggressive growth mutual fund returned 10.21% over the last one year period.”

Elizabeth Bramwell is the fund’s portfolio manager, and has been with the firm for five years.

“The fund focuses on acquiring large cap equity securities whose value is expected to rise appreciably in the future,” Zacks concludes. “The fund primarily invests in companies which are growing at a significantly fast rate. The aggressive growth mutual fund has a ten year annualized return of 2.19%.”